Are Our FEERs Justified?
The Fundamental Equilibrium Exchange Rate (FEER) method of calculating an equilibrium real exchange rate is the most widely used alternative to PPP. This paper presents the first comprehensive historical test of FEER calculations for six major economies, using estimates for the last 20 years. We focus on unit root and cointegration techniques both at the individual country level and jointly using panel based estimation. Specifically, we test whether real exchange rates cointegrate with time s...Expand abstract
- Journal of International Money and Finance
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